How to Best Manage Corporate Water Risk

Water has a place on the risk agenda for every business, either as a direct operational issue or in the supply chain.

And the risks continue to grow, be it too much or too little water, or water that’s too dirty or too expensive.

Some leading companies are already changing the way they approach water management by investing in water-efficient technologies and working with suppliers to encourage more responsible water use. This includes Nestlé.

Best Practices

After opening its first “zero water” plant — meaning the plant does not use any local freshwater resources for its operations — in 2014 in Mexico, Nestlé last year began investing in technology to help reduce water use in California. The company expects its California efforts to save 55 million gallons of water a year, a reduction of nearly 8 percent compared to 2014 levels. This includes transforming the Nestlé USA milk factory in the city of Modesto into a “zero water” factory that will extracts all the water it needs from milk used to manufacture dairy products.

Another example of corporate water management best practices: Hormel Foods has set a goal is to reduce water use by 500 million gallons by 2020. From 2012 to 2014, the company reached 67 percent of its goal. This was achieved in part by the team at Farmer John meat products, which implemented a variety of water reduction projects including high pressure water system automation, condensing tower treatment automation, wash cabinet water and wastewater load reduction. Combining these technologies, the team saves 27.9 million gallons of water, or 22 percent, from 2013 to 2014 — far exceeding the original 2 percent freshwater reduction goal.

PwC’s Lauren Koopman works with companies to understand and manage their water risks. She tells Environmental Leader there are three primary actions companies should take to best manage their water risk.

1. Understand the different types of water-related risks

Koopman says water management issues pose a few different immediate and significant risks to companies. The first is operational impact. “Storms, droughts, and other severe weather events can cause disruption of operations, increased supply chain costs, and erosion of product quality due to pollution,” Koopman says.

Another is regulatory impact. “Stricter regulations can cause higher water-quality standards and increased costs related to treatment and litigation,” Koopman says. “Companies are looking more closely at the risks pertaining to each of their locations.”